What’s under the Christmas tree this year? Inflation, Q Commerce and AI.
Phew, with just a week to go until the festive break for most, it’s all kicking off in the trade right now with all eyes on price increases. Fresh food prices jumped by 1.2% in October in what was the highest rate of inflation since August 2019. Ambient food inflation for the month of October nudged up to 0.9%. Greencore said recently that inflation in sandwiches and ready meals was running in the ‘low teens’. Britvic said inflation in their soft drinks and juice world was running in the ‘high teens’. It is the same in drinks, health and beauty.
Unsurprisingly, there is a very determined mood amongst manufacturers dealing with rampant inflation in raw materials, energy, labour and transport. Everyone, I mean everyone, is lining up price increases. I haven’t heard of anyone backing down.
The feeling in the trade is that retailers have accepted the autumn’s initial wave of price increases but haven’t really increased on shelf prices materially in the run up to their Christmas peak trading. With retailers making bumper profits over recent years, the feeling is that they are temporarily absorbing these increases in exchange for a higher share of Christmas trade.
So perhaps ‘serious moves’ on retail prices are being delayed by suppliers until the first week of January. That’s now seems the effective date for the second, larger wave of price increases. In January, the merchandising teams in the retailers will be working overtime to adjust all the prices.
The other thing to note is that ‘Range Simplification’ appears to be back… with a twist. Ken Murphy from Tesco announced a Clubcard revamp with the message that Tesco want to partner with suppliers “at a much earlier stage of your innovation cycles so you can make decisions on whether to kill off or move on with a project”.
Yikes, that feels like code for Tesco killing your NPD before it gets off the ground if they don’t feel it fits with their category. Cynics argue that this Dunnhumby and RangeMe development is less about smart data and more about smart money – Tesco monetising sales data and selling it back to suppliers.
I do worry that with these systems we could end up knowing the price of everything and the value of nothing. Dunnhumby only looks at what has happened. It can’t predict how tastes, packaging preferences, fashions and flavours will change, evolve and develop. It takes a forward-thinking buyer and a progressive, innovative supplier tuned in to their customers to work together to deliver a winning formula.
This month I had the pleasure of chatting with Emma Lewisham on The FMCG Insider podcast. She is the founder of Emma Lewisham beauty, the world’s first carbon positive beauty brand. She’s one of the most progressive ANZ businesses and we talked all things clean vs. natural beauty as well as discussing the future of retail beauty and the circular economy. So have listen for yourselves in our latest podcast, Exploring Clean vs. Natural beauty with Emma Lewisham.
I also wanted to share a really good article the team have written on the rise of ‘Q-commerce’ (stands for ‘Quick Commerce’). Despite being in its infancy, the market is quickly maturing, with some early indicators of sweeping consolidation. It’s going to get a boost given current lockdown announcements taking place throughout Europe, with consumers again looking for alternative ways of receiving their groceries. Take a look for yourself by reading our blog post – Is it a bird? Is it a plane? No it’s my last mile grocery delivery!
Another round of covid restrictions has got the team thinking about what this means for the future of research. We have another interesting read for you this month about the future of qualitative research. It’s a super exciting time for qual right now with AI and machine learning transforming the research landscape and the capabilities we have on offer, read the article for yourselves – The New Qual Era.
Despite these tough and uncertain times, one thing’s for sure and that’s how grateful I am to the fantastic team here at HRA Global and our loyal clients.
Together we got through 2021 and I know there are better times ahead for us all so I hope you can close the laptop lid and enjoy a well earned break.
All the best to you and yours and see you in the new year.